Early Warning Systems of Currency Crises : An Empirical Investigation in Vietnam

Based on the study of Kaminsky and Reinhart (1999), this paperstudies and applies early warning systems of currency crises to thecase of Vietnam from 1996 to 2014. Its results show that the currencycrisis is signaled six times during the observed period. Severalprincipal indicators of the currency crisis in Vietnam includeincreased import, decreased export, excess real M1 balances, lowinternational reserves and deposit growth, high interest rate and creditgrowth, high domestic-foreign rate differential, and decreased realoutput. Hence, the Government and the State Bank of Vietnam shouldgrant appropriate policies not only to control the money supply andinterest rate, but also to stimulate the ability of capital mobilization ofVietnam’s banking system and to facilitate export activities in thecoming years